It was one of the few memorable lines from a forgettable series of presidential debates this fall. “We are in a big, fat ugly bubble,” said Donald Trump.

The full quotation in context is, “We’re in a bubble right now. And the only thing that looks good is the stock market, but if you raise interest rates even a little bit, that’s going to come crashing down. We are in a big, fat, ugly bubble. And we better be awfully careful.”

Trump has pulled off many firsts, including this — the first time a presidential candidate acted preemptively to inoculate himself against blame for a certain bear market, and the recession that will come with it.

We have no idea whether his gambit will work, nor do we much care about political finger-pointing games. This morning, we’re much more concerned with what to expect when the Fed pops that “big, fat ugly bubble” — B-FUB, we’ll call it — at its next meeting on Dec. 14.

This morning, the trade in fed funds futures points to a 98.6% probability the Fed will pull the trigger on an interest rate increase come the 14th.

It will be the first increase in a year. When the Fed acted in December 2015, that too was no surprise. But the stock market went into an eight-week tailspin — the S&P 500 down 11% peak to trough.

There’s no reason to expect different this time. Last year’s swoon was accompanied by the Chinese authorities carrying out a “stealth devaluation” of the Chinese yuan. This year, the yuan is already tanking without any action on the part of Chinese authorities at all. All the Fed needs to do is raise rates “even a little bit” in another 13 days… and B-FUB starts deflating.

Now it’s true that last time, the market staged a comeback starting in February — rallying all the way to record levels after Trump’s election.

But beware the ides of March — there will be no comeback rally in 2017, says David Stockman.

Under the “zombie budget” deal struck a year ago between President Obama and House Speaker Paul Ryan, Uncle Sam’s debt ceiling was suspended. We were spared any debt-ceiling showdowns between the White House and Congress this year. The national debt has drifted ever higher, to $19.3 trillion this week.

The debt ceiling once again kicks in on March 15 of next year. The moment Trump takes office, he’ll have 55 days in which to cut a deal with Congress to raise the ceiling well past $20 trillion. His $1 trillion public-works program won’t happen without it. Nor will the tax cuts he’s proposed.

“The debt ceiling expiration is the skunk currently slinking around in the woodpile,” says David Stockman. “It will lead to an immediate crisis of governance and one or more government shutdowns early next spring.

“It will also lead to an ugly round of hostage-taking the Donald and his New York inner circle have not even begun to fathom.”

Yes, the president has a majority in both houses of Congress. But it’s more tenuous than you might think. “The GOP Senate majority is razor thin (52-48) and deeply divided by regional interest and ideological differences,” David reminds us. Democrats can easily stymie any legislation with the threat of a filibuster that requires 60 votes to break. “They will adopt the same playbook as the GOP did during the Obama era — bash, battle and block the entirety of the White House’s agenda.”

And in the House, the deficit-hawk tea partiers will make Speaker Ryan’s task of rounding up a majority akin to herding cats — although David tells us he prefers the analogy of a circular firing squad, heh. Ryan needed the help of Democrats to pass a suspension of the debt ceiling a year ago; they’ll be much less inclined to help with a Republican in the White House.

“Washington will be paralyzed for months — even years — after the inauguration,” David goes on.

“There will be no massive tax cut, no huge infrastructure initiative or any other variation of the ‘fiscal stimulus’ will-o’-the-wisp that seems to have sent the bond markets reeling and the stock averages to giddy flights of fantasy.

“Every block of votes Trump manages to wrangle for the debt ceiling increase will require a king’s ransom of compromises on everything he has promised to do in the first 100 days.

“President Trump may even be forced to back off from his promise to kill Obamacare in order to get Democratic votes for the debt ceiling increase. And that’s because there is not a chance in the world that tea party Republicans will go along with the idea that an election earthquake happened only so they could vote for trillions more of public debt as their first order of business.

“The stock market will swoon when it becomes clear that the Imperial City is descending into ungovernable political chaos and gridlock. And that is virtually guaranteed.”

If that doesn’t take the air out of B-FUB, nothing will.

But that’s next spring. The air starts coming out of B-FUB in less than two weeks, when the Fed raises rates.

With that time limit in mind, David is planning an online training session next week — outlining a strategy to seize on the bursting of that “big, fat ugly bubble.”

David organized a similar event a year ago at this time, laying out a similar strategy anticipating the Fed’s rate increase then. In the year that followed, his readers have been able to collect gains including 63% in a month… 88% in five weeks… and 135% in about 100 days.

As it happens, the stock market’s “Trump bump” already appears to be stalling out.

After record highs last week, the major U.S. stock indexes have been meandering this week. As we write this morning, the Dow is up and once again knocking on the door of 19,200. But the S&P 500 is in the red, and the Nasdaq is down nearly 1% as traders dump tech shares.

Treasury yields keep climbing. The 10-year is now at 2.46%, another 16-month high. Gold keeps stumbling, the bid down to $1,169.

Crude is up another 4% today, a barrel of West Texas Intermediate now fetching $51.54. Traders sure are giddy about this OPEC production cut. Of course, it’s only for six months, and OPEC’s member nations have a history of pumping well above the official limits. But for now, it’s party time!

The big economic number of the day is the ISM Manufacturing Index — up solidly from 51.9 in October to 53.2 in November. As a reminder, numbers above 50 indicate a growing factory sector.

Federal accounting in action: It might be 40 years until we know the costs of the government’s student loan programs.

The Government Accountability Office issued a report yesterday — ripping the Education Department a new one for slipshod accounting practices, and attempting to come up with workable numbers.

We know this much: Uncle Sam is owed $1.26 trillion of outstanding student debt. And the GAO says the feds will likely forgive at least $108 billion of that debt under various loan-forgiveness programs. Another $29 billion will be written off because of the borrower’s disability or death.

Here’s the wacky part: The Education Department’s accounting assumes it will never incur losses via the borrower’s default… because under a 2005 law, student loans can’t be wiped out in bankruptcy.

But in reality, about 8 million borrowers are currently in default. That’s about 18% of all borrowers. Yes, they can have their wages and Social Security checks garnished… but seriously, how much blood does Uncle Sam expect to extract from a turnip?

It’s through this accounting trick that the government’s student loan portfolio is considered profitable. “But the loans are certainly not profitable when accounting for defaults — as a bank must,” says Dan Amoss of our macro research unit.

Meanwhile, the number of delinquent subprime auto loans has reached 2010 levels, according to new numbers from the Federal Reserve Bank of New York.

And they’re rising at a rate comparable to the one before the “Great Recession” of 2007–09.

We’ve been warning about this trend since late 2013 — when we noticed more than a quarter of all new car loans going to borrowers with credit scores of 500 or less.

“The increasing delinquency of subprime auto loans is worrisome,” says today’s Wall Street Journal account of the New York Fed report, “because it has come when the overall U.S. economy has gradually been on the mend and the unemployment rate has been falling.”

That, too, could have been written shortly before the Great Recession, no?

“Media bias? You, 5, along with many others, don’t get it,” writes one of our regulars, weighing in on The Washington Post trumpeting an anonymous blacklist of websites that “echo Russian propaganda,” including that of our own David Stockman.

“First, a paraphrase from Screw USA-101. There are two groups that have a death grip stranglehold on the USA: the financial elite (the 1%, Wall Street, you know who I mean) and the political elite (political party is irrelevant, since there is no discrimination for the ‘bought and paid for’), and the obscene alliance between the two.

“Oversimplified, the FE pays off the PE, which, in turn, votes in programs which channel vast sums of taxpayer/government money into the pockets of the FEs. Trump has ‘hinted’ that this is bad and needs to stop.

“Truth is that fine folks like the big bank CEOs have already participated in documented illegal activities, such as market manipulation, for which their companies have been duly fined by the SEC and CFTC. So much for the civil aspects of these misdeeds. But the criminal issues are still out there, for which the ‘too big to fail, too big to jail’ can still face criminal charges.

“Sooo the FEs can’t afford a president who would support the pursuit of justice. Who owns the media companies — uhhhhh, could it possibly be the FEs?!!! The media companies are not incompetent or fools. They are just dancing to the tune of their masters’ voices.

“I hope that Trump has sense enough to stay safely ensconced in the security of Trump Tower until Jan. 20, or at least until after Dec. 19 [when the Electoral College meets]. I do sincerely hope that this last is an irrelevant comment.”

The 5: It’s not that we don’t get it. It’s just that we don’t harp on it. The drumbeat you hear online about five or six companies controlling 90% of U.S. media is exaggerated… but not much.

Best regards,

Dave GonigamThe 5 Min. Forecast

P.S. The man you’re about to meet has ZERO financial experience.

He’s retired from the postal service, living on a modest pension, and until we turned on our cameras, that was about as good as he figured it could get.